What is the best way to handle utilities

[brad ell]

I'm curious to know how current landlords handle utilities in homes where they have both the upstairs and downstairs rented out to separate tenants (with only one meter)? Do you pay utilities and then make the tenants pay a percentage, say 60/40 split upstairs/downstairs? Or do you have the upstairs tenants pay utilities and the downstairs tenant then pay them?
Just would like to hear anyone's thoughts about what they find works well. I plan on being my own property manager
Thanks

 

[adriano]

You can include the utilities in the rent or you can split the utilities between tenants by square footage and charge the rent according to the size of the units and if it is in the basement or the upstairs.
I would personally pay the utilities and charge more for rent. I would call the utilities company and see what the average has been for the last year, then I would monitor it and after a year I would adjust the rent to cover it going forward.

 

[Matt Crowley]

Hi Brad,

I post the net amount for rent on Kijiji and charge a fixed amount for utilities. The lease they sign is for the net amount of rent and there is a separate utility addendum. The utility addendum states that utilities are a fixed amount but to a maximum budget of $225 per month or the maximum of 60% on average of the household utilities if basement suite is occupied or 100% of household utilities if basement suite is vacant.

PM me if you want the addendum.

In ugly parts of recession in 2015, I offered a utility rebate program where tenants pay fixed utilities but will get a refund at end of the lease if they use less than $xxx.... Most tenants do not monitor their utility consumption very closely however and it ends up break-even for everyone.

To my knowledge, there is no practical method to submeter a home. Otherwise, that is definitely what I would do. (Have to duplicate electrical panels, run separate water lines, second furnace probably the only reasonably easy submetering)

 

[Marnie]

I have used both methods mentioned above and for they both work well. My preference is to charge a flat fee for utilities and advertise the net rent amount. I position it as "no guess work for your monthly budget" in the ad. To date we haven't seen much in the way of spiking consumption. In my opinion using the 60/40 method or one tenant paying the other tenant will only increase your management load for the inevitable he said/she said conversations you will have tenants. These two suggestions keep things much simpler.

 

[Jeff MacKinnon]

I charge 50/50 and keep the bills in my name. I send a copy of the bills to my tenants and provide the math for them.
They etransfer me their payment.
I prefer to know what's going on with the utilities and if there's a spike I address it. I have one lovely lady who has been a tenant for four years and if the downstairs people use too much utilities I rebate a bit for her. Seems to work.